Steer Clear: Analysts Just Sounded the Alarm on These 10 Overhyped Stocks

8. Axon Enterprise (NASDAQ:AXON)

Average Upside Potential: 84%

Number of Hedge Fund Holders: 53

Craig Hallum downgraded Axon Enterprise to Hold from Buy on November 6 and set a $390 price target, a day after the company’s third-quarter report. The business underneath still shows strong recurring growth.

Axon told shareholders it is building a platform rather than a product line. Revenue grew 28% to $909 million, and the software and services side grew faster than the rest.

Annual recurring revenue reached $1.75 billion, up 40%, and customers kept spending more on what they already own. Revenue from Axon’s AI tools passed $100 million a year, and bookings for those tools keep climbing. Its Platform Solutions segment more than doubled, and its newer software products together reached a run rate of nearly $500 million.

Axon is also putting more money into drone maker Skydio and became its exclusive public safety distributor in the US and Canada. It made its Axon Guardian safety tool generally available, too, and its new Body 5 camera has 25 times the processing power of the prior generation. The financing behind that expansion is the subject of our look at what Axon’s $1 billion of zero-coupon notes really cost.

7. Cisco Systems (NASDAQ:CSCO)

Average Upside Potential: 44%

Number of Hedge Fund Holders: 101

Morgan Stanley analyst Meta Marshall downgraded Cisco to Equal-weight from Overweight on November 5 and cut her price target to $120 from $135. She pointed to the stock’s strong run, though she still expects several years of double-digit growth.

Cisco has a ready answer when people ask whether it is a real AI company: $9.3 billion of AI infrastructure orders from the largest cloud customers during its last fiscal year. Some of that business already reached the income statement, and the company expects $7.5 billion of AI infrastructure revenue in the new fiscal year.

The strength showed up in the fiscal fourth quarter, when revenue rose 18% to $17.3 billion. Product sales climbed far faster than services, which were flat. CEO Chuck Robbins called it a very strong close to a record year and said Cisco is positioned to support customers however or wherever they deploy AI.

Guidance for the new fiscal year calls for revenue of $72.2 billion to $73.4 billion. Whether Cisco can also win as customers look to spend less on AI is the question behind our piece on Cisco’s role in cheaper AI buildouts.

6. Gildan Activewear (NYSE:GIL)

Average Upside Potential: 35%

Number of Hedge Fund Holders: 32

UBS analyst Jay Sole downgraded Gildan Activewear to Neutral from Buy on November 6 and cut his price target to $38 from $71 after the third-quarter report. Beneath the weak guidance, the quarter held good news on profitability.

Adjusted operating margin came in at 27.0%, ahead of the company’s guidance of about 26%, as savings from the HanesBrands purchase began to show. Adjusted earnings per share rose 54.0% to $1.54 from a year earlier.

The cash flow supports the buyback. Free cash flow reached $605.7 million, and the board approved a new program to repurchase up to about 5% of the company’s shares, starting this month. The sale of the HanesBrands Australia business closed recently, and the proceeds went to pay down debt. The quarterly dividend stays in place as well.

Gildan still aims for about $250 million in annual run-rate savings by the end of 2028. CEO Glenn Chamandy said his confidence in the long-term growth opportunity has not changed, and the company plans to lay out an updated outlook at an investor day. Whether that purchase was a bargain is what our look at Gildan after it halved following HanesBrands weighs.

5. Fidelity National Information Services (NYSE:FIS)

Average Upside Potential: 26%

Number of Hedge Fund Holders: 49

J.P. Morgan downgraded Fidelity National Information Services to Neutral from Overweight on November 4 and cut its price target to $38 from $53, citing the company’s financial guidance and its chief financial officer’s exit. The cash numbers behind the stock tell a steadier story.

CEO Stephanie Ferris said client demand remains strong. Adjusted free cash flow was $862 million in the third quarter, up 8.0%. For the full year, the company expects free cash flow of $2.15 billion to $2.25 billion, a gain of 33% to 39%.

That cash is going toward lowering debt. FIS paused buybacks and small acquisitions to speed up the process and expects to resume meaningful repurchases once leverage reaches its target level. Even so, it returned $248 million to shareholders in the quarter, mostly through dividends. Adjusted earnings per share rose 6.6% to $1.61.

Ferris said investments in security and innovation will build a more recurring, predictable revenue base. The company is also tidying its portfolio. It recently sold a non-core prepaid business in banking, and its strategic review of the rest of the business is still underway.